Friday, July 31, 2015

The Future of Housing Associations & Social Housing

Yesterday we had the news that Genesis, a large Housing Association is to stop building homes for rent following the recent Government budget.

Today, Inside Housing magazine reports that other housing associations are seeking advice on how to deregister as social landlords and become completely private bodies. By doing so they think they can avoid the recent measures.

This is a watershed moment. Not only for housing associations but for all social housing including council stock as well.

The Communities and Local Government Select Committee is looking into the future of Housing Associations and there is a call for written evidence by Friday 28 August 2015. I am sure that UNISON will be sending a submission and I will also be consulting with my branch (Greater London Housing Associations Branch) on making a response.

The key threats are :-

  • 1% cut in rents that Housing Associations can charge for the next 4 years when only last year they were told that they can plan ahead assuming a 1% increase plus inflation for the next 10 years. This could mean that some will go bust since they modelled an increase into their business plans when they took loans and bonds to pay for new build. Good news for Housing benefit and tenants but not if it means they get Rachman & Sons as their new landlord. 
  •  The reduction in rents will also inevitable mean threats to jobs and services. Housing associations have been for many years been providing additional services to residents such as floating support to vulnerable tenants, job training and youth clubs. These will all be at risk. 
  • The proposed maximum benefit cap of £23k per family in London and £20k outside will not only result in more evictions and rent arrears especially for tenants with children. It will also make it harder for landlords to let their empty properties to residents on waiting lists since many will not be able to afford the rent due to the cap. This is crazy.
  • Extending the Right to Buy will also mean some housing associations going to the wall especailly if the government does not fully refund any discount (100k in London). Others will have financial problems with paying off early fixed rate loans (such as LOBOs) and meeting their convenants even if they get the full value of any sale. 
  • Housing associations are at the moment "charities" and many of them have benefited from money or gifts of land in the past and this could cause problems with their status if they sell property in this way.
  •  If local authorities have to sell their stock in order to fund the discount then that will be not only unfair but financially disastrous for them and their tenants. The 3 year settlement on council housing finances has also been ripped up.  
  • It is rumoured that instead the government will take away the remaining subsidy for new investment and use it to fund the discount. This will pretty much end the supply of new homes at sub market rents in expensive areas such as London. 
  • Even if the government does fully refund the cost of Right to Buy (which I doubt) then since new homes costs more to build than exisitng properties there will still be an overall reduction in social homes.
  • The so called "pay to stay" will mean that tenants who earn over £40k in London (and £30k outside) will have to pay "market rates". This will be unworkable unless Housing Associations are given the powers to demand income details from tenants with criminal sanctions, which will of course, go down badly with all tenants. I thought this government was against means testing? 
  • If "pay to stay" does go ahead and means that renters are charged full market rent they will be effectively forced to try and exercise the right to buy in order to stay in their homes. Even if you are on £40k per year salary in London, you will find it difficult to get a mortgage even with a discount. Market rents will be completely unaffordable in parts of the City.
  • I have no doubt that the certain individuals and rogue companies will be looking to making deals with vulnerable tenants into "loans" to enable them to buy their property in order to get hold of the £100k discount.
All in all, the sector is facing a crisis and a threat to its future but we have been here before. Right to Buy for housing associations was defeated in the 1990s following a broadbased campaign against it. The government is vulnerable to pressure on housing. We must campaign against these changes.

Even Tory MPs must understand that if government grant is taken away from building new homes and rents reduced then the current grossly inadeaquate supply of housing will get even worse. The leader of Tory Westminster Council, Phillipa Roe, said it would wipe out "swathes" of social housing and leave it unable to house residents in need.

The issue is not just the future of housing associations or council housing but where will the elderly poor, the disabled, the unemployed and the low paid live in the future? In workhouses, in "barracks for the poor" or in British versions of Les banlieues slums?
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